Churning, Earning, and Burning: Balancing The Equation

There are a ton of ways to earn miles and points that will heavily reduce your travel costs, but that’s only half of the equation. After signing up for credit cards, shopping through portals, and going out of your way to a restaurant that participates in the rewards network, you’ve probably accumulated a bunch of miles and points. Now what? Using these miles and points towards travel will return the largest bang for you buck, but how much time do you actually have to travel per year? My fiance and I have accumulated a large number of points over the last year, but less than half of them have been put towards redemptions so far. I don’t currently plan to slow down the accumulation because the earning itself is honestly a lot of fun, so what are my options? I’ll take you through my thoughts on maximizing the value and balancing out your earning and burning of miles and points below.

Checking The Scoreboard

Not too long ago, I decided to see just how many points Becky and I have earned since we started into this crazy game of credit cards and travel points. After signing up for over 18 credit cards (we’ve gotten a few more since that post), the final tally comes out to 892,500 points/miles, $600, and 2 free nights at a Hilton. Very conservatively, that’s worth over $10,000 towards flights and hotels. Wait, I forgot to mention, THAT’S JUST FROM THE SIGNUP BONUSES!!! Now don’t get me wrong, signup bonuses are far and away the easiest, fastest way to accumulate miles and points, but you also can’t ignore all the ones earned from regular spending (plus the gift card reselling I’ve recently gotten into!). At the end of the day, we’ve earned upwards of a million points in a little less than a year!

I’m not spelling this all out to brag about how many points we’ve earned (the pros won’t be impressed by this total), but rather to talk about one of the craziest “first world problems” I’ve ever run into myself:

A true first world problem, more miles and points than I know what to do with.

Despite earning almost a million points over the past year, we’ve currently spent a measly 294k so far. We’ve also booked the 2 free nights and have plans for another 235k of them, but that still leaves almost half a million points unaccounted for. Luckily, this is a fantastic problem to have and I’ll tell you why.

The Limiting Factor

Earning obviously isn’t the limiting factor in our reward travel, so what is? The answer lies somewhere in between our available vacation time and a bunch of fun stuff going on in our home town that doesn’t require us taking airplanes or staying in hotels. I get a few weeks of vacation per year which I understand to be pretty good for someone my age, and Becky’s schedule is somewhat flexible, but the primary limiting factor on travel is our jobs. At some point in the distant future we’ll leave our comfortable jobs and travel for weeks at a time, but we’re not at that point yet. What really locks this in as a first world problem is that our limiting factor isn’t cost. I imagine that’s the primary factor stopping most others in the world from traveling often, but we’re fortunate enough to have found a way around that problem (for now at least…).

How To Balance The Equation

Let’s look at a few different things I could do to help with this “problem” I have:

Let Them Accumulate

The most obvious answer might be to simply change nothing and let the point balances build up over time. Some programs have expiration dates, but almost all of them are simple enough to extend almost indefinitely, so I wouldn’t have to worry about losing them. The primary problem with this approach is the dreaded devaluation. While 25,000 miles might get me a roundtrip ticket today, it might only be enough for a one-way flight somewhere down the line. There’s no guarantee that comes with miles and points related to how much they are worth, so letting them sit is a losing proposition, even more so the longer you wait. I don’t plan on sitting on points that I might be able to eventually use someday and I don’t recommend you do either.

Crank Up The Quality Of Redemptions

While I have more than enough miles and points for a bunch of economy trips in budget hotels, I could probably blow through them pretty fast by upgrading to business or first class redemptions along with 5-star hotels. I have yet to fly business or first class internationally, so I’m really looking forward to that (first one is currently in the planning phase!). On the other hand, we have been redeeming hotel points for quality hotels and have found a good balance with those points. I guess this is more of an airline and flexible point problem than a hotel problem, but the idea still stands. I am working on this part as of late, so maybe I’ll be able to catch up to our earnings rate with bigger and better flights over the coming years.

Stop Earning Them!

No! As I mentioned in the intro, earning all of these miles and points is a lot of fun for someone like me who loves numbers and “beating the system”. For as long as they’ll offer me 50,000 points here and 50,000 miles there, I don’t see myself turning down the opportunities. One thing I have considered is tilting my preference for offers more towards cash back which is certainly possible, but I believe I’ll run out of valuable cash opportunities rather quickly. On the other hand, there seems to be a never ending supply of quality miles and points signup bonuses that I can keep earning for as long as they keep approving me for more cards (I wonder how long that will keep up…). It’s possible that the difficulty of earning points will go up for us in the future, but I don’t think it will drop by the half it needs to in order to balance out.

Stop Worrying About Getting “Optimal” Redemptions

Reading a lot of blogs about points, miles, and reward travel, the idea of the “value” of points comes up a lot. Various blogs even list out their personal valuations of every type of point there is, but opinions vary pretty wildly. In my opinion, the true value of a point is an extremely personal consideration and it’s impossible to assign values that apply across the board. For someone that travels far more than they can cover with their miles and points earnings, getting the optimal value out of each one is an important endeavor. The question becomes whether to use them on flight A, flight B, or flight C because the other two will have to be covered with cash. It’s actually really easy to calculate in a situation like this because you can compare the miles required to the cash cost and the answer should become obvious.

For someone like me in the opposite situation, the value of each point is something I’m slowly beginning to care less about. For flexible points that can be cashed out, there’s obviously a floor to the redemption value I’ll accept, but anything higher I look at as a win. For example, Chase Ultimate Rewards points can be cashed out at 1 cent per point. I’m obviously not going to redeem 20,000 of them for a hotel room that costs $150, but I just might for one that costs $260. While the value of that redemption (1.3 cents per point) is nothing to write home about, it’s greatly preferred to paying the cash. At the end of the day, I should just be happy with my “free” travel and not get caught up in exactly how “free” it was.

Conclusion: Or How I Learned To Stop Worrying And Love The Free Travel

Somebody gets that reference, right?

Several months ago, I was extremely interested in what kind of value we were getting from redeeming miles and points. More recently however, I took a look at exactly how much we were earning and reevaluated how much I should actually care about the “value” of my points. For as long as the limiting factor in our travel is vacation time, “maximizing” the value of the redemptions is something I’m just not going to worry about anymore. I’m fine stocking away a small amount of points if I have an idea for redeeming them in the next year or two, but beyond that I’m considering all the earnings fair game for our immediate use. I look forward to the time when we have more time to travel than we know what to do with, but I think we’re many years away from that point. Until next time, I’ll be learning about turning up the burning part of the earning and burning equation that is churning.

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11 thoughts on “Churning, Earning, and Burning: Balancing The Equation”

Ha! I guess my strategy of accumulating for a while with no specific redemption in mind goes against the thinking of just about everybody in the game. We’ll see how that shakes out in the long run, but for now I’m happy to just be accumulating and (like you) not assigning any particular value to the points (other than a penny for flexible rewards).

I also completely agree with you on the “optimal” redemptions. I’d much rather spend the points getting closer to 1 cent in value for economy and get 2-3 trips out of it vs. blowing them on a single luxury flight in first class. To me, it’s all about the destination and while flying in a premium cabin is nice (I have flown international business once – but it was a business trip, not paid for out of pocket) the destination and experiences on the ground are always going to be worth more to me.

I agree, I have a ton of points/miles that I’ve accumulated and I don’t mind hoarding them. I assume at some point, airlines (and banks) will crack down harder and harder so I am fine with amassing them even though they will be devalued over time. They still present more value than immediately using them for me. Plus, every time we book we have to use 3x miles since there are 3 of us so it’s depleting healthily even though I add faster than it depletes.

I’ve always felt the same way about quantity of trips over quality of flights/hotels, but more recently my thoughts have slowly been migrating towards the quality. As I mentioned in the article, this is primarily due to the fact that the quantity part is limited by my work schedule. Once I accept that, it partically becomes a decision to either increase quality of flights/hotels with points or let them accumulate. Where you seem to be collecting “Points for Later” (I laughed at this more that I should have), I’ve decided to go the opposite way and just start spending more on the same trips.

A little hoarding here and there isn’t a bad thing, but it’s tough to gauge the value over a longer period of time. Depending on the number of years we’re talking about, cashing out UR and simply investing them might end up getting you more travel over the long term. At the end of the day, you’re still going to have a lot of free travel to redeem, so it’s hard to complain, even if it’s not optimal.

The current Chase rule of 5 cards per 2 years only matters when applying for the CSP and Freedom (for now at least). I’ve already acquired the CSP and don’t need to get the Freedom (Becky has one), so I can simply apply for other cards from other banks. I can even sign up for Chase’s co-branded cards of which there are several good offers, so their recent change shouldn’t really slow down my applications at all.

As for Amex’s once per lifetime bonus, that applies per card and they have many cards I have yet to sign up for. Eventually I’ll have to slow down with Amex as I work my way through their different cards if they don’t change their rule.

The only card I’ve applied for multiple times is the Alaska Airlines personal card, of which I have 2 (plus a business Alaska card). All of the other cards have been unique and I there are a ton of good cards I have yet to apply for.

Overall, there are MANY different valuable credit cards and I think I can keep my current pace up for at least a couple more years without running out of cards worth applying for. Plus, I have yet to apply for very many business cards, but that practically doubles the amount available! After a couple years, I’ll even be able to repeat on most of the cards (pretty much all of them that aren’t Amex). It’s entirely possible the core dynamics of churning change at some point though and I’ll have to move on to something else entirely. For now, I plan to take advantage of the great offers while they’re available and remain flexible to whatever changes may be coming.